Learning objectives
After completion of the course, students should be able to:
• assess and understand the role of incentives and institutions in driving economic growth, reducing inequality and poverty, and enhancing human development;
• assess and analyse the relevant economic and non-economic relations underlying the response of different agents (such as individuals, households, firms, and government) to processes of change;
• analyse how institutions shape behaviour and interact with the development process.
Course description
This course is motivated by the idea that sustained and sustainable development requires a transformation in economic processes and changes in the underlying micro structures of a country. Accordingly, the aim of the course is to study and analyse households, firms, and institutions engaged in the process of economic development and will rely mainly on microeconomic analysis to study the interactions between these various agents. The course is broadly conceived and will draw on material from neoclassical economics, institutional economics, and behavioural/experimental economics.
Current research in this area blends theoretical models and empirical application. Accordingly, the course will draw on both types of work and will be divided into four blocks.
The first part will apply economic analysis to understand the behaviour of (rural) households. Various models of the household will be analysed and household decision-making regarding issues such as agricultural production and consumption, intra-household resource allocation, and technology adoption will be discussed, as well as the implications of incomplete product and factor markets, inter-linkages of transactions, natural risks and vulnerability.
The second part of this course will focus on (small and micro) firms, the constraints they face, their potential and how that potential can be unlocked. The emphasis will be on returns to capital, investment decisions and the role of the family in such decisions.
The third part will address the microeconomic aspects of human capital and labour.
In the fourth part of the course, the role of institutions in driving economic development will be studied.
Invigilated in-class exam (100%)
Acemoglu, D., Johnson, S. and Robinson, J.A. (2001) ‘The Colonial Origins of Comparative Development: An Empirical Investigation’, American Economic Review, 91(5): 1369–1401.
Banerjee, A., Duflo, E., Goldberg, N., Karlan, D., Osei, R., Parienté, W., Shapiro, J., Thuysbaert, B. and Udry, C. (2015) ‘A Multifaceted Program Causes Lasting Progress for the Very Poor: Evidence from Six Countries’, Science, 348(6236).
Bursztyn, L., González, A.L. and Yanagizawa-Drott, D. (2020) ‘Misperceived Social Norms: Women Working Outside the Home in Saudi Arabia’, American Economic Review, 110(10): 2997–3029.
Dupas, P., Goldberg, P. and Pande, R. (eds.) (2026) Handbook of Development Economics. Vol. 6.
